Eau Claire Simplifies Business Loan Programs
The city of Eau Claire is streamlining its business loan programs to enhance accessibility and clarity.
Fund Consolidation
Previously consisting of five distinct funds, the city has streamlined its approach, now offering three primary loan options:
- Business Startup Loan Fund
- Business Expansion Loan Fund
- EDA Revolving Loan Fund
Loan History and Impact
Over the past 35 years, the city has facilitated over 180 loans, primarily funded through grants and not drawing on taxpayer money. Kendall Williams, from the city's Economic Development Division, highlights the program's success:
"None of it is taxpayer money from here within Eau Claire. It is money that we’ve gotten through various grant programs. And we’re able to administer the programs at lower interest rates than traditional lenders."
A Historical Perspective
Thomas Kemp, a professor and department chair of economics at the University of Wisconsin-Eau Claire, traces the program's origins back to the closure of the Uniroyal tire plant, noting the city's effective utilization of these funds:
"This is a tradition that is somewhat unique to Eau Claire, because not all cities have this sort of post-industrial environment. Historically, Eau Claire has made very good use of those monies."
The program has facilitated nearly $11 million in loans, with only three write-offs since its inception.
Loan Eligibility and Rates
The loans are designed for startups lacking established financial histories. A key change includes an increased interest rate for new businesses, rising from 4% to 6%, compared to a 4% rate for established businesses. The city justifies this adjustment due to high demand and the need to sustain the program while maintaining competitive rates.
Additionally, new businesses will incur a $250 application review fee. A new feature allows restaurants, previously excluded, to apply for expansion loans on a case-by-case basis. Furthermore, businesses facing cash flow struggles may defer principal payments for 12 to 18 months, though interest will still accrue.